Rico suave! Spain is adding prostitution, drug trafficking and smuggling to its GDP

It looks like Europe has finally found a way out of its 7 year depression. First it was Italy, than the UK and now Spain is going to add prostitution, drug trafficking and smuggling to its GDP calculations, effectively reducing its debt-to-GDP and opening up the bankers pockets for even larger government bonuses, kickbacks and bribes. Until of course the debt climbs again to outpace the new, hoe induced revenue boost in which case the regular Spanish Joe will pay the price in salary cuts and economic austerity. But hey, for now let’s FIESTA rico suave style!

From El Pais:

The [Spanish] government has been working to measure a part of the illegal economy, and incorporate it into the official calculation of Gross Domestic Product (GDP). This week it revealed its results: according to revised figures released by the INE [Spain’s National Statistics Institute] on Thursday Spanish GDP increases by between 2.7% and 4.5% after illegal activities such as prostitution, drug trafficking and smuggling, together with other methodological changes, are included.

Other European countries have been doing the same. Portugal, for instance, on Thursday published figures showing that illegal activities accounted for around €700 million of GDP, around 0.4% of the total. Meanwhile, results from the United Kingdom indicate that prostitution, drug trafficking and smuggling account for around €12.3 billion. That’s 0.6% of GDP, according to a report released last week by the UK’s Office for National Statistics (ONS).

So are the good and decent folks in Brussels going along with this scheme. They are not only going along with it, they are demanding it. After all if anyone has the most to gain from keeping the failed European Union kleptocracy together it’s the fat cat totalitarians in Brussels, who love their prostitutes escorts as much as the next guy.

“A European Union regulation states that part of the illegal economy – prostitution, drug trafficking and smuggling – must be included in GDP calculations before 2016,” the INE explains. Government sources say Brussels is demanding an estimate of these changes to GDP before August.

At the end of last year, José Roca, a representative from Anela, an association of brothels, received a call at his Valencia office from the INE. It wanted to know if there was any data about turnover, costs and other such figures for the sector. To start with, Roca thought it was a joke. But when he received an official email from the INE he was finally convinced that it was a serious request.

I love it…ANELA, the Association of Brothels. Kind of like the National Basketball Association or Major League Baseball. I wonder if ANELA has collective bargaining agreements, salary caps and revenue share schemes in place.

Of course the trillion dollar question is how the hell will they accurately calculate pimping, smack and smuggling (whatever the hell that is)? It won’t be easy but they will crunch some numbers to get the desired results needed by the EU overlords.

Official sources in Spain agree that such calculations are tricky, but also have methodologies to come up with estimates. For example, drug trafficking is measured based on the amount of narcotics seized by the authorities: total trafficking is extrapolated from this, allowing the police to come up with an approximation of the impact of the production and sale of drugs on the economy.

Take 2012, for example, the last year for which there are available figures: the police seized 21 tons of cocaine, 325 of hashish, and 229 kilos of heroin, with a street value of approximately €2.7 billion, which is nearly 0.3% of GDP (based on the unofficial value the police place on each substance). Police sources estimate that they seize around 10% or 15% of the total amount of drugs smuggled in Spain, but there is no official report on the issue. What’s more, the calculation depends on the purity of each drug and whether it is valued according to its wholesale price or its street value.

The authorities use a similar method for smuggling as they do for drugs. And as for prostitution, the number of people working in the sector will be calculated via the networks of brothels. This figure will then be extrapolated to give an estimate for the contribution to the entire economy. But the data so far collected does not look very consistent.

“GDP is calculated every quarter and the statistics will have to reflect the value of what is produced and the profits generated,” explains Ángel Laborda, the director of the Funcas thinktank. “But the reality will be very complicated, because there is no way to measure these activities on a quarterly basis.”

Yes, the statistics absolutely have to reflect the “value of what is produced.” Europe…a continent that “produces” BMW’s, IKEA, Zara, sex, drugs and rock n’ roll.

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